You had better be interested in being beaten up by hooded, masked guys with baseball bats because this is what it is going to feel like going through the short sale process! Read this before proceeding to the Short Sale Search Below.
Here are some tips on how to survive the process.
Home buyers will sooner or later come across a short sale. This is an attempt by the owner to sell a home before the bank takes it back through foreclosure. A short sale may salvage their credit rating and lift the burden of the mortgage debt. The short sale process hinges on the bank taking e a loss now and approving the sale thereby eliminating the process of foreclosing and reselling the home.
1. The Short Sale Price is set by the seller and their agent & seller, not bank : The agent and seller will usually create a very low asking price in order to attract lots of buyers. They will do this to get so many buyers that they can then do a Highest and Best offer with all of them (and sometimes more than once) The bank is usually not aware of the asking price, but does have final say in what an acceptable offer will be. This process often takes months and the seller will try to put you off long enough to get an offer that is as high as possible.
2. Low offers usually get no or, at the most, a very slow response: Since the bank is usually toldthe price, when low offers come in the bank does often not even respond. It takes an offer close to the bank's investment to get their attention. Sometimes it is possible, by searching the public record to determine how much a bank has in the property and, if you do this research and, make on offer close it may get the banks attention. More Below Search.
3. A good buyer's agent will check comparable's before submitting an offer and share with you what the going price should be for the home: The agent will check recent home sales in the area to give buyers a better idea of the price properties like the short sale are selling for. This ammunition will be needed to help convince the bank that the offered price is realistic.
4. Don't get emotional or financially tied up in the property : Short sales are not usually short time frames to purchase. It often, (usually) takes much longer to "earn" a short sale than a regular sale. Do not expect to get any one particular property. Since there will be many bidders and the process will take a long time, you should keep looking and trying to find a real deal in the regular market.The reality of life today is that you will probably will find a better deal in the general sales market before your short sale is accepted.
5. Sellers with equity in other properties or or elsewhere (like boats, cars, jewels, bank accounts, savings and etc) will not qualify for a short sale and will be asked to pay the difference. Some will change their minds: Sellers that have equity anywhere else will be made to liquidate it and pay down the mortgage before the bank will approve a short sale. The seller might be asked to sign a promissory note to pay back all or most of the debt. Sellers often do not cooperate with this and bulk or try to hide the other assets.A bank will not approve a short sale and take a loss if it suspects equity is elsewhere. Thus one more reason for delay.
6. "Bank Approved Short Sales " prices are quickest to close : Sometimes the bank approves a price for a short sale in advance. They do not usually negotiate after this price is approved. A lowball offer will not get anywhere under these circumstances.
7. The bank decides on who the buyer will be .... not the seller. The bank will pick the most appealing buyer, which may mean different things to different banks. Some banks may prefer buyers with larger down money. Some want the highest price.
8. Do not rely on an Inspection to get a discount! Repairs are almost never done. Generally you are dealing with an "as is" house.Sometimes there is a credit and the buyer takes the responsibility of fixing anything.
9. When you get short sale approved, you must close on time : Be prepared to close on the date the bank sets or there will be penalties or the home will go to the next bidder
The short sale process can be a terror. We have seen buyers in tears over this process and must warn you that it is not often that it works out. Remember the bank usually can just go to foreclosure and take possession of the home at anytime. If this happens, the process is void and you would usually have to start all over again with a different foreclosure agent.